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US President Barack Obama celebrates with his daughters Sasha (2nd L) and Malia (R) and US First Lady Michelle Obama in Chicago on November 7, 2012. (Image credit: AFP/Getty Images via @daylife)

Stocks plummeted today amid worries both at home and abroad, as the Dow Jones industrial average recorded its worst loss this year. Anxiety about further gridlock in Washington, D.C., and grim European economic reports weighed heavily on trading sentiment.

After voters returned a divided government to power, investors took flight, fearing that Democrats and Republicans may not be able to reach a compromise on the fiscal cliff before a series of tax increases and spending cuts start Jan. 1. "The re-election of President Obama removes one uncertainty that has been weighing on the markets over the last few months. But they are none the wiser about if, how and when Congress will deal with the colossal tightening in fiscal policy scheduled to occur early next year," according to Action Economics. "And with Congress still split, President Obama will struggle to garner bipartisan support for a more comprehensive agreement that addresses the longer term issue of how to put the nation’s finances back on a sustainable path."

In Europe, Mario Draghi, the chief of the European Central Bank, voiced concern that Germany, the eurozone's largest economy, is starting to be weakened by the debt crisis. Draghi's comments darkened already gloomy outlooks for the continent: Germany has been the only economy to avoid stalled growth. Meanwhile, europe's official economists cut growth forecasts for France and Germany and predicted even more dire situations in austerity-riddled economies than before; there, rising unemployment and government spending cuts will reduce consumer purchasing and economic activity.

The Dow Jones industrial average dropped below the 13,000 mark for the first time since August, falling 2.4%, or 312.95 points, to 12,932.73. This was the first three hundred-point drop for the blue chip index in almost a year.

The Nasdaq composite lost 2.5% to 2,9437.29. And the S&P 500 declined 4.3% to 1,394.56.

Abroad, Asian markets were mostly flat, while in Europe, the FTSE 100 followed American markets into the red. That index dropped 1.6%.

Wall Street today made its feelings known about Obama's reelection. Financial services lobbyists poured millions into a big bet on Obama's Republican opponent Mitt Romney, hoping that the election of the one time Bain and Co. executive would foster a pro-business attitude in D.C. Wall Street thrust cash at Obama during his first election, then distanced themselves from the president after he championed financial reform like Dodd-Frank and characterized Wall Street elite as "fat cats." Now, after such a dramatic swing toward the Republican party, Democrats owe Wall Street little allegiance.

Both parties will set to work on addressing the fiscal cliff. Many market observers say that Obama's victory makes increases the odds that a compromise won't be reached in time, though most still believe D.C. will eventually reach a decision after a hearty game of brinkmanship.

"The history of the relationship between Obama and the Congressional leadership is one of eventual compromise, though not in the absence of circumstances forcing both parties to the table," says Citi economist Tina Fordham, who correctly called the preservation of D.C.'s status quo. "Our expectation continues to be that the trail of last-minute, heart-attack compromises will continue, given the same actors retaining their positions, with appetite for comprehensive reform limited."

Today's lower trading, says FTN Financial economist Chris Low, "likely reflects the conventional wisdom that it would have been easier for Romney to postpone the tax increases and spending cuts that make up the fiscal cliff than it will be for Obama"

Investors were, however, saved from the worst-case scenario. An uncertain outcome or a recount would have amplified Wall Street's worries; Obama's victory in seven of the 10 key swing states provides closure. It should also signal to Wall Street that Dodd-Frank will remin intact, allowing the legislation to be completed and big banks to hire the remaining necessary personnel.

And Obama's victory is seen as guaranteeing the liquidity that has boosted equities markets during the president's first term. Romney, publicly critical of the Federal Reserve's policies, had said he would replace Chairman Ben Bernanke. Moreover, the early losses were likely from traders who need to sell and close bets of a Romney upset.

Financial stocks were among the day's biggest losers. Bank of America gave up 7.1%. Citigroup lost 6.3%. JPMorgan Chase declined 5.6%.